Keith Hudson's Musings

The signs of the demise of capitalism and re-gaining the main track

The conventional view of economics that pervades all text books today is that a broad consumer market is necessary in order for capitalism to be self-sustaining. A large base of wage and salary earners needs to save for their old age — or the government does it for them — and, in the meantime, mass savings are aggregated and invested in capital equipment. This enables Industry to make a further tranche of consumer goods and services that consumers need and/or want to buy and both sides make a profit from the transaction. Industry makes a financial profit, consumers that of satisfaction.

But there is quite a different mode of profitable economic activity. This is that industry makes the goods and services that consumers need and/or want by using automated methods of which the two chief factors are sophisticated software programming and energy to drive the machine. Such energy resources — such as coal or oil or gas resources or wind turbines, etc — have to be worked for — that is, need energy to finally exploit them as electricity — but so long as the energy gained is more than the energy spent then it all makes sense. As for the production of goods and services, so long as one generation of machinery is succeeded by a generation that is more efficient in the use of energy — say by using a better version of software — then a profit is made.

But only while there is a never-ending stream of new consumer goods and services to excite customers. If such a supply of goods and services ever dries up then capitalism is finished as a working model because producers can no longer make profits. They become disincentivized.

However, even if no new consumer products are invented, energyism can continue even when there is zero financial profit as at the instant of the transaction. This is so long as producers and consumers are the same people. This is something that is impossible by definition in the capitalist model — where only the producers can make a profit.

The idea that producers and consumers can be the same people is not only feasible but is already beginning to appear with the increasing success of automation in one economic sphere or another. It is by no means complete in any sphere so far but is steadily heading towards such a situation in one sector or another where one population — producers and consumers combined — will be able to satisfy all their personal needs unaided — except, of course, for the machines they look after.

Except for automation itself — which the industrial revolution gave us as a free gift — then any population that was clever enough to design and maintain fully automated machines can manage without a separate consumer base. Any particular group still needs to make a profit at some stage, though, in order to be able to buy all the other specialized goods and services that it needs from other groups. As the profits don’t erise at the point of exchange — as they did under capitalism — they can only arise by some groups being able to survive relative to some of its competitors which are dying because they are not clever enough or disciplined enough to maintain their automated machinery in good order.

in short, the re-emergence of energyism means that after two false trails — into agriculture and industrialism — our species is now back on its main track of survival. Quite what an energyistic era will look like as regards culture, leisure pursuits, habitational style and housing density and so on, no-ne can possible foresee, But the signs that we are heading there are quite clear, three of which are: (a) there have been no new consumer goods since the personal computer in the 1980s; (b) automation is proceeding remorselessly; (c) populations of advanced countries are dividing into a highly educated in-breeding elite and a broader educationally-declining population which, also, is not replenishing itself with sufficient progeny and will thus decline numerically in due course — which is just as well, one might add, if routine jobs, whether physical or cerebral, are disappearing anyway.